What's the most important thing the military should do while going through this downsizing period?

The main focus should be on retaining quality personnel. To coincide with this, DOD must make an effort to ease the transition of chaptering unsatisfactory soldiers. By this, I mean, let's stop paying soldiers large amounts of severance pay for their inability to maintain the standard. This only burdens units and makes the chapter process not even worth it. Also, in order to retain the productive and contributing soldier, there must be some type of incentive program in the likes of reenlistment options. We as a military have fallen victim to what is known as Packards Law in which, there have been an outstanding amount of small bureaucratic red tape placed around our nco's, driving away the right type of leaders which then forces higher level leadership to promote the wrong people, in turn forcing more red tape to ensure they are properly doing their jobs and the cycle starts over. This cycle has left us in an endless state of mediocrity. Once we learn that micromanagement is the opposite of effective leadership, we may begin to dig ourselves out of this hole we are in.

The government has a bad habit of sticking round pegs in square holes and vice versa, the one action that in my opinion would gain the most positive response is simply prior to discharge, in the last six months or so, arrange for 3 correspondence courses for the service member in varied career fields, preferably in subjects of the service members choosing. Prior to discharge evaluate for reclassification based on performance. If the service member is retained, the service has significantly increased the members versatility, if not, the member has increased the chances of employment in a difficult economy. It's win-win. And it can help overcome bad career matches due to recruiting quotas.

Educating separating members on all benefits and entitlements. Using the VA, assisting with continued education, and building a competitive résumé to market themselves into civilian life are the top three things the army should focus on as many soldiers prepare for the downsize. With the oldies who will be staying in the service there should be an equal amount of information being shared as many programs that were available in the past will most likely be discontinued due to the downsizing. 

Keep the Faith with those that had/have guaranteed retirement.

I see all these responses saying "keep the best and cut the worst". Question becomes how do you identify those people? By NCOER/OER? Too many raters have the attitude that "if my subordinates get an 'among the best' rating, that means I get an 'among the best' too" or "This guy tries really hard, I don't want to ruin his career". Just going by ratings can be just as subjective as using PT scores or number and prominence of awards: different people will have different standards for all of those things.

I believe retention of the best, brightest is paramount, when our veterans  return to civilian life they need job counseling  housing education available to them . I'm talking a hand up not a hand out.they deserve respect.

back to basics.......being a soldier

What is your response?  We need to protect our troops and family while in unform or out of uniform

Teach those staying in how to advance in there JOB and there RANK.